Other Long-Term Liabilities

What Are Other Long-Term Liabilities?

Other long-term liabilities are a detail on a balance sheet that protuberances together obligations that are not due in 12 months or less. These debts that are less earnest to repay are a part of their total liabilities however are ordered as "other" when the company doesn't consider them sufficiently important to warrant individual identification.

Figuring out Other Long-Term Liabilities

Liabilities are debts that a company owes. They show up on the balance sheet and are classified as either current — they must be paid back in something like a year — or long-term — they are not due for no less than 12 months, or the length of a company's operating cycle.

Then, at that point, there are different liabilities. In financial statements, companies utilize the term "other" to allude to anything extra that isn't adequately critical to separately identify. Since they aren't considered particularly noteworthy, such things are grouped together instead of broken down individually and attributed an individual figure.

Other long-term liabilities can be defined as the other debts that a company is required to pay back in a period of a year or more that are not separately accounted for and recognized in the company's balance sheet.

Important

A few companies uncover the composition of these liabilities in their footnotes to the financial statements on the off chance that they accept they are material.

Much of the time, it is just a question of show preference the choice about whether to organize these material liabilities on the balance sheet or aggregate them under "other long-term liabilities" and break the entry down in the notes. Without a doubt, it is in many cases conceivable to determine what makes up the particulars of other long-term liabilities on a balance sheet by consulting the footnotes inside the company's 10-K recording or annual report. In any case, this isn't generally stringently important, implying that not all companies will give extra subtleties of these particular obligations.

Types of Other Long-Term Liabilities

Other long-term liabilities could incorporate things, for example, pension liabilities, capital leases, deferred credits, customer deposits, and deferred tax liabilities. On account of holding companies, it can likewise contain things, for example, intercompany borrowings — loans produced using one of the company's divisions or subsidiaries to another.

Special Considerations

Lumping together a group of debts without identifying the idea of the debt could seem like a possible red flag. In reality, this practice is normal and shouldn't raise concern, given that the obligations being referred to are generally small compared to the company's total liabilities. They ought to likewise be comparable to how the company has worked previously — at times, year-to-year comparisons of other long-term liabilities are given in financial statement footnotes.

If the amount of other long-term liabilities as a percentage of total liabilities (as shown on the balance sheet) is sufficiently high to justify investigation, and there is no associated note, the analyst could call the investor relations (IR) contact to ask questions.

Illustration of Other Long-Term Liabilities

Passage Motor Co. (F) reported roughly $28.4 billion of other long-term liabilities on its balance sheet for fiscal year (FY) 2020, addressing around 10% of total liabilities. In the notes to the financial statements, the principal components were broken down into pension liabilities, other post-retirement employee benefits, employee benefit plans, vendors' customer allowances and claims, and others.

Highlights

• A few companies might unveil the composition of these liabilities in the footnotes to their financial statements in the event that they accept they are material.
• Other long-term liabilities are debts due past one year that are not considered critical enough to warrant individual identification on a company's balance sheet.
• Other long-term liabilities are lumped together on the balance sheet as opposed to broken down individually and given an individual figure.